Why Replace Traditional Customer Loyalty Programs With Blockchain? Armacoin has the AnswerDon't we all sometimes get caught up in making new customers that we turn our back on earning the trust of our existing clients and retaining them!
If so, these statistics might come as a shock. A mere 5% increase in customer loyalty can shoot up the average profit per customer by 25% – 100%. It is much easier to forge stronger relationships with existing customers and turn them into loyal customers than to get a new customer through marketing. As imaginable, this technique is cheaper too. Client acquisition comes with a heavy price.
There are countless technologies in the market to encourage customer loyalty through reward programs. 69% of customers vouch that the appeal of loyalty programs bears influence on their choice of retailers. From airlines, hotels, and restaurants to e-commerce stores, we can't think of a business that hasn't implemented loyalty programs yet. But are they as effective as they seem?
Influence of Loyalty Programs On Customer BehaviourMost of the consumers have no clue about the number of loyalty points they are in possession of or how to redeem them. Since almost all businesses offer loyalty programs these days, they can easily get lost in the clutter, leaving the points unused until they expire.
When it comes to redeeming loyalty points, it is not an easy task at all. There are stringent rules that take a little getting around to like minimum spends, expiration dates, post evaluation, etc, which decay the system.
The incentive for customers to redeem loyalty points is negligible when their benefits are conditional on making purchases with the business.
Data concerns also stop customers from signing up for loyalty programs.
Low redemption rates of loyalty programs lead to low client retention rates and low returns of investment as well.
Recently, we saw Singapore Airlines, Chanticleer Holdings, American Express and Boxed announce migrating their loyalty programs into blockchain-based tokens. Blockchain technology and blockchain-based crypto tokens have proven efficient in tackling the inherent drawbacks of traditional loyalty programs.
The decentralized public ledger provided by blockchain will efficiently store loyalty points, keep track of customer activities, and reward tokens as loyalty points. By setting customer retention and increased sales through them as goals, blockchain technology will revitalize loyalty programs.
Why Customers Prefer Tokens Over Loyalty Points? 1. Ease of Use
Loyalty crypto tokens are interoperable. Users can receive and redeem loyalty tokens without going through much trouble.
2. Less Clutter
Customers don't have to remember hundreds of passwords to log in to different loyalty accounts or cram their wallets with loyalty cards. They will be provided with a unique crypto wallet to which rewards from multiple businesses are credited to and redeemed from.
3. Better Incentives
Traditionally, loyalty points are redeemed for products and services, which can never surpass the liquidity offered by cash. Since crypto tokens can either be converted to cash or other crypto tokens any time the customer chooses to do so, they will act as much better motivators. Unlike traditional loyalty points, they never expire or lose value.
4. High ROI
Smart contracts enabled by blockchain technology will ensure that customer transactions and activities are tracked transparently. Token-based loyalty programs will increase efficiency and reduce management costs and loss arising from errors and fraud.
5. Clear Ownership
Once customers are rewarded with loyalty crypto tokens, no one can take it away from them. Not even the issuing organization citing internal policy conflicts. It is recorded publicly on the blockchain. The tokens never go out of value or expire. Customers can redeem them according to their discretion.
Building Customer Loyalty Through Armacoin Tokens For better customer satisfaction and client retention rate, Armacoin has developed a decentralized blockchain-enabled loyalty program for enterprises. The native coin on the Armacoin platform, Armacoin GZM, will be used as tokens and rewards.
1. Data Privacy
Loyalty programs often resource data from customers to customize marketing campaigns. While this may seem like a great way to retain customers, it sometimes backfires too. They are unwilling than ever to expose their sensitive data as the number of ads they are targeted with increases. Armacoin partners with businesses to give customers more control over their data and how it is handled by leveraging the security features of blockchain.
2. Cost efficiency
Blockchain implementation in an organization and its business processes involves initial costs. But in the long run, loyalty programs on Armacoin platforms and crypto tokens will cut expenditure down in various departments including administration, operations, and marketing.
3. Time-stamped Transactions
Messages written on the block are irreversible. They can be superimposed with new messages, but can never be erased or altered. This prevents double spending, fraud, embezzlement, and manipulation of transactions.
4. Flexibility
Customers can redeem the tokens in small increments if they wish to do so. The complex point accrual systems and limited rewards inherent to traditional loyalty programs are resolved on the Armacoin platform.
5. Transparency.
Since the history of loyalty tokens is made irreversible and transparent by using cryptographic hashing, customers don't have to fret over the safety of their tokens. Blockchain technology leaves no scope for breach of customer rights as all information and transactions are recorded on an immutable blockchain ledger.
Conclusion As the economy thrives, customer acquisition costs are only going to skyrocket. When a business has a group of loyal customers who are emotionally attached to the brand, word of mouth will bring the major share of sales to the company.
While it is obvious that customers will require some time to wrap their heads around blockchain technology, on the bright side, they will take an interest in the business since blockchain implementation is often seen as a sign of futuristic companies. We have witnessed many recent instances where blockchain technology has put businesses on the limelight.
With better education imparted by the company and smart user experience offered by Armacoin, engagement with loyalty programs will steadily increase. Armacoin intends to integrate blockchain into everyday life by following this principle.
